For most of my career, I’ve been focused on two things:

Operating businesses and Multifamily real estate.

The strategy has been pretty simple. Take money generated from higher-risk, active businesses… and move it into more stable, long-term assets like apartment buildings.

That shift—from risk to stability—is how I’ve tried to build durability over time.

Now, to be fair, the sharp rise in interest rates a few years ago put a dent in that model. But zooming out, it’s still worked well for me overall. So I’m sticking with it.

That said, there are other ways to think about real estate.

In some cases, the real opportunity is when you combine real estate with an operating business.

We’ve done that before in the Wealth Formula Investor Club with self-storage, and the results were excellent. Storage is operationally simple, relatively boring—and that’s exactly why it works.

But there’s another category that sits at the opposite end of the spectrum. Hotels.

They’re sexier.
They’re more volatile.
And yes—they’re riskier.

But the upside can be dramatically higher.

One of my closest friends here in Montecito has quietly built a fortune doing boutique hotels over the past few years. He started with a no-frills hotel in Texas serving the oil drilling industry.

Over time, he combined his operational experience with his talent as a designer—and eventually created some of the highest-rated boutique hotels in the world.

He’s absolutely crushing it.

Of course, most of us aren’t world-class designers or architects. I’m certainly not. Still, his success made me curious.

Hotels have been on my radar for a while now—not because I understand the business, but because I don’t.

When I asked him how he learned the hotel industry, his answer was honest:

“I figured it out on the fly—starting with my first acquisition and a great broker.”

That’s usually how real learning happens.

So this week on the Wealth Formula Podcast, I brought on an expert in hospitality investing to educate both of us.

We cover the basics:

How hotel investing actually works
Where the real risks are (and where they aren’t)
How returns differ from multifamily
And what someone should understand before ever touching their first hotel deal

If you’ve ever thought about buying or investing in hotels—but didn’t know where to start—welcome to the club.

You don’t have to jump in tomorrow. But you do have to start somewhere. This episode is a good starting point.

Listen on Apple Podcasts:

https://podcasts.apple.com/gb/podcast/545-should-you-invest-in-hotels/id718416620?i=1000748759003

Listen on Spotify:

https://open.spotify.com/episode/5Lx5Rp4x704lWRazWLqDOK

Watch on YouTube:

https://youtu.be/GMFf6-g8w_0

Transcript

Disclaimer: This transcript was generated by AI and may not be 100% accurate. If you notice any errors or corrections, please email us at phil@wealthformula.com.

Welcome everybody. This is Buck Joffrey with the Wealth Formula Podcast coming to you from Montecito, California. Before we begin today, I wanna remind you, if you’ve not done so and you are an accredited investor, go to wealthformula.com, sign up for our investor club. Uh, the opportunity there is really to see private deal flow that you wouldn’t otherwise see because it can’t be advertised.

And, uh, only available to those people who are deemed accredited. And then what does accredited mean as a reminder? Well, if you’re married, you make $300,000 per year combined for at least two years with a reasonable expectation, continue to do so, or you have a net worth of a million dollars outside of your personal residence.

Or if you’re single like me, $200,000 per year or a million dollars net worth. Anyway, that’s probably, uh, most of you. So all you gotta do is go to wealth formula.com, sign up for investor club because hey, who doesn’t wanna be part of a club? And, uh, by the way, it’s a great price. It’s free. So join it. Just get onboarded and all you gotta do is just wait for deal flow.

What a deal. Now let’s talk about different kinds of things to invest in. For most of my career, I, I have really focused on two things I’ve focused on. Either operating businesses, uh, in my case, those operating businesses largely have been medical and multifamily real estate. Uh, the strategy itself, theoretically the way I think about it, take money from sort of these active businesses, a higher risk, move them into more stable long-term assets like apartment buildings.

Okay? The idea is that’s how you build some durability over time. Now, to be fair, okay, to be fair. Sharp rise in interest rates a few years ago. Put a little bit of a dent in that model. But here’s the thing is that you can’t throw out the, uh, baby with the bath water. ’cause when I zoom out, still worked well for me overall.

So I’m sticking with it and, uh, that’s my story. I’m sticking with it. That said, there are always other ways to think about real estate, right? Real estate is not just multifamily. Um, in some cases, the real opportunity is when you combine real estate and operating businesses. So. We’ve actually done that before in our wealth formula investor club.

Um, and we’ve done that through self-storage, for example, and the results were really good. Storage is operationally, generally pretty simple. Probably not that simple, but you know, but more so than other things, relatively boring. Boring is good, and that’s exactly why it works. There’s another category that sits at the opposite end of the spectrum of boring, and it’s sexier and it’s more volatile and it’s riskier.

And uh, that is the area of hotels, right, like leisure, that kind of thing. But the upside in those things can be dramatically higher. You know, one of my closest friends here. Montecito, I talk about him all the time. He’s a, he is a little bit of an inspiration to me, although I wouldn’t tell that to in space.

He’s built a fortune doing boutique hotels over the past few years and the way he started, you know, and I think it was only about a decade ago because he bought like this no frills hotel in Texas that was serving the oil industry. There was a bunch of guys, you know, drilling needed a place to say, and you know, he had this and he actually.

I don’t know that I would recommend this, but he, he told me he bought it sight unseen just based on the numbers. Ah, man, I gotta tell you, I don’t think I’m that lucky. If I bought something sight unseen, it would not work great for me, but it did work great for him. But over time, what he did is he, he combined his operational experience with his talent as he’s like a designer, like designs, homes, an architect, uh, of sorts, although more than that.

Um, and he, he used to build houses for like famous people in Hollywood. Anyway, he took that skill and so he combined it with hotels and he created some of the highest rated boutique hotels in the world. And he’s absolutely crushing it. Just crushing it. Of course, the reality is that most of us aren’t world-class designers or architects.

I’m certainly not. I’m not artistic at all. Still, um, you know, the fact that he’s had so much success in this space and that he loves hotels. What got me curious? So, hotels have been on my radar for a while, not because I understand the business, but actually because I don’t. And when I asked him how he learned, uh, about the hotel industry, he just said, you know, I figured out on the fly and, uh, you know, started with my first acquisition, had a great broker who taught me everything I, you know, needed to know at the beginning and.

That’s a great story. I mean, and ideally that’s how things happen. As you can tell, this guy is, uh, seems to just hit on everything. So good for him. So this week on Wealth Formula Podcast, I wanted to get a little bit of a hotel investing 1 0 1. So I brought on an expert in hospitality investing that could educate both you and me.

So we’re gonna cover some of the basics, how hotel actually works, you know, what are the risks returns. Like, what should people do if they even consider, you know, buying their first hotel or investing in one? So if you’ve ever thought about investing, uh, in hotels, or maybe that’s the first time you’re hearing about it and you’re curious, uh, welcome to the club and uh, we will have a great interview for you right after these messages.

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545: Should You Invest in Hotels?